Green Star ratings secure better returns

Green Star certified buildings in the Sydney and Melbourne CBDs have outperformed the broader office market by 2.8 per cent and 1 per cent respectively.

The PCA/IPD Australia Quarterly Green Property Index, published by IPD, provides positive proof that Green Star-rated projects in Sydney and Melbourne deliver higher returns on investment than their non-green counterparts.

The Index finds that, in the financial year to June 2012, superior capital growth drove stronger investment returns in Green Star-rated and high-rated NABERS energy (4 to 6 star) buildings.

Green Star returns were strongest in the Sydney CBD with rated buildings (12.0%) outperforming the market (9.2%) by 280 basis points. The outperformance was driven by strong capital growth of 6.3 per cent.

In the Melbourne CBD, Green Star-rated buildings (11.9%) outperformed the market (10.9%) by 100 basis points. The outperformance was driven by capital growth of 4.2 per cent.

“The business case for Green Star certification continues to stack up,” says the Chief Executive of the Green Building Council of Australia (GBCA), Romilly Madew.

“This latest report adds to the growing body of evidence which confirms that Green Star-rated buildings deliver a range of quantitative and qualitative benefits: from lower operating costs and increased office productivity, through to faster patient recovery times and improved student results on tests,” Ms Madew adds.

The report finds that tenants are preferring buildings with Green Star and high NABERS energy ratings. This is providing upward pressure on effective rents and asset values, which is translated to an outperformance in investment returns.

“The latest IPD research puts it all there in black and white: the Green Star-rated assets in Sydney and Melbourne deliver long-term value by outperforming unrated assets,” Ms Madew concludes.